In a letter dated July 25, 2019 a group of ten U.S. Senators wrote CEO Sundar Pichai to “express objection to Google’s misuse of independent contractors and temporary workers.”
Such potential misuse of temporary workers includes the following:
- They often remain in such positions long term doing work of a permanent nature for typically much lower pay
- They have fewer opportunities for professional advancement
- They have less leverage and are vulnerable to management demands
- They are less protected against abusive/inappropriate behavior by management
What is of particular concern is that Google employs more temporary workers than full time according to the New York Times. (The numbers are 121,000 v 102,000).
This would suggest they are using or misusing worker classifications as a basic business model, allowing the amount of personal compensation paid out in 2018 to be $400 million despite being valued at over $100 billion.
Google has responded to the Senators, strongly denying any such misuse.
The company says that its employment practices “accord with the highest industry standards.”
It further pointed out that such use of temporary workers was a common practice across practically every industry in America.
At NYC Startingup Up, our focus is on whether a practice helps or hurts the startup and workforce ecosystem in our City.
HELPFUL TO ECOSYSTEM
In the ‘helpful’ column, it can be noted that Google has a large presence in NYC and continues to expand.
We view their presence as a strongly positive thing when it comes to workforce development in our City generally. In addition to the jobs they create, their presence helps attract other tech companies, further increasing the number of positions available. We also generally believe that a multiplier effect exists and that high skilled jobs in the technology sector also lead to the creation of non-tech jobs. (According to research by Enrico Moretti, 5 non-technology sector jobs are created for every tech position).
We would even note that although paid less than salaried employees, contractors who work for Google in the City nevertheless tend to earn a much higher income than workers outside of the tech sector.
Accordingly, we strongly feel that Google’s presence in NYC has clear benefits.
HARMFUL TO ECOSYSTEM
However, in looking at whether there is anything in Google’s specific response regarding the use of temporary workers that is helpful to our startup ecosystem, unfortunately we do not find anything that is helpful. To the contrary, we find cause for concern.
First, its’ statement that it has employment practices that “accord with the highest industry standards,” must be examined.
Uber and Lyft are 2 well known examples of tech companies that utilize a large number of independent contractors as opposed to providing full time employment. Unfortunately they are not the exception, with temporary workers and independent contractors consisting around 40 to 50 percent of an average tech company according to some measures.
As noted above, Google itself acknowledges this trend when it sought to excuse its behavior by saying the use of temporary workers is a common practice.
While there is some merit as far as Google goes that it may not be particularly worse than other tech companies, as far as the NYC startup and workforce ecosystem is concerned, that temporary workers are used as full time employers for less pay and in a disadvantaged position is something that we not surprisingly deem to be harmful.
The fact that this practice is common makes it considerably worse.
At issue is widespread unequal treatment and the potential for abuse and illegal behavior. While pay for temporary Google workers may be higher than non-tech positions in the City, the financial struggles of Uber and Lyft drivers and other workers in the ‘gig economy’ to earn a livable income is frequently documented these days. At low levels of pay, the other misuses mentioned above become especially exacerbated.
Further, there is the danger of this practice being a third major contributor along with globalization and automation that tears away at the basic economic security that individuals should enjoy.
If this trend continues and worsens, future generations will have even less security.
Looking at the big picture, the widespread use of temporary workers in the tech industry has been noted above and while less harmful than companies such as Uber and Lyft, we consider the most harmful aspect of Google’s use of this practice to the NYC startup and workforce ecosystem to be that it further solidifies this practice as seemingly acceptable, thereby threatening the economic security of members of the workforce of the future.